The Impact of Agricultural Subsidies

The Impact of Agricultural Subsidies Many countries started to negotiate Doha Development Agenda under the World Trade Organization (WTO) in 2001. In July 2004, members in WTO reached agreement to make a reform in agriculture. One of focused things is to cut agricultural subsidies both in developed countries and developing countries. In recent several years, millions of people from both developed and developing countries give in response to eliminate agricultural subsidies. Agricultural subsidies should be eliminated because they distort free trade, damage the local environment.

The meaning of agricultural subsidies "Agricultural subsidies, financial assistance to farmers through government-sponsored price-support programs." (Columbia Encyclopedia, 2000) In fact, agricultural subsidies are that governments give cash to farmers in order to grow certain product or certain quantity of product. There are two main benefits to set up agricultural subsidies. "Beginning in the 1930s most industrialized countries developed agricultural price-support policies to reduce the volatility of prices for farm products and to increase, or at least stabilize, farm income." (Columbia Encyclopedia, 2000) First is to stabilize the local market food prices, and second is to raise farm income. Farmers could get cash directly from government.

The history of agricultural subsidies The history of agricultural subsidies help to understand how agricultural subsidies benefit to market and farmers. The first government assistance to farmers was in the United States in 1920s. Because of World War I, the market needed a great amount of food to supply. Government encouraged farmers to increase production during war and postwar time. However, which caused that the grain and cotton was oversupply in the market. The supply of production was over than demand so that there was a big decline in prices. Therefore the United State...